What is Ethereum

You’ve probably heard of cryptocurrency at this point and familiar of one of the most popular forms of cryptocurrency today: Bitcoin

You being here means that you want to learn more about Ethereum before you start using them. Whether you may use Ethereum for holding as an investment, trading to make profit, browsing Web 3.0, or simply because you’re curious. This is a good place to start for you and at the end of these articles you will get a better understanding on how Ethereum and other cryptocurrency works.

Many of those that get interested in virtual currency have no idea how the currency works, and sometimes only to find out that they have lost a lot of money from the lack of knowledge on how to manage it. We hope you familiar yourself with how these new technology works by reading our site.

Read More: What is Bitcoin?

Why do we need Ethereum?

The internet today is centralized. Information on databases are stored on one server, under one centralized authority. All your information on Amazon, Facebook, and Google is stored on their single servers. This means that these single servers own your information and these authority owners may distribute it, censor your content, or your information may be breached by a a hacker.

Government and companies are allowed to control and censor the content that users may distribute online through these authority servers. We have seen data breaches from authority servers such as Target, Ashley Madison, and even U.C. Berkeley. Credit card, passwords, and social security numbers are stolen leaving users open to theft and identity fraud.

Enter Ethereum

Ethereum was created with the intent that people can build programs which we use everyday that have no middle man, no single server, and no central authority to store that information.

Instead, information is stored on a blockchain which is distributed and open across the the entire Ethereum network. The worldwide network can be considered a global computer which verifies and execute the transactions. Blockchain technology was first introduced with the crypto-currency Bitcoin, which allows anonymity of users yet allow transaction to be globally transparent and verifiable.

Users may interact with the Ethereum blockchain through the use of a crypto-currency called ETH – a digital form of money that allows code to be written into the currency. This opens up a whole new world of opportunities and possibilities.

Read More: What is the blockchain

Smart Contracts

One of the most predominant features of Ethereum are what are known as smart contracts. Simply, a smart contract is just computer code that defines certain parts of an agreement and can self-execute if terms are met.

Imagine if you and friend made a bet about who would be the winner in the next Superbowl. You and your friend would create a smart contract and inside the smart contract would be the terms of the bet and a source of who would verify the winner such as ESPN or the NFL website. You and your friend would then deposit 1 ETH into the smart contract and on the day of the Superbowl the smart contract will verify and execute and the winner will be paid out the 2 ETH that were in the contract.

Using this system users can agree terms with another party without the need for a third party to execute and confirm the agreement. This allows users to bypass companies, banks, or governments which allow the parties anonymity to be persevered.

Read More: What Are Smart Contract

Decentralized Applications

Most people aren’t computer programmers and developers. How do we interact with smart contracts? The answer is: dApps

A dApp is a ‘blockchain enabled’ website, where the smart contract is what allows it to connect to the blockchain. The attraction of dApps is that while it is similar to any other web application, its files and databases are not hosted on a centralized server, such as Amazon Web cloud. dApps communicate with the Ethereum blockchain to run, get its data and execute transactions.

The programming language to build on top of the Ethereum network is called Solidity. Similar to Javascirpt, developers can create applications that can be used by users on any device.

Read More: dApps

The Ethereum Ecosystem

Every user of Ethereum that are looking to engage and make use of smart contracts and dApps on the blockchain needs Ether (or ETH) to proceed. It is for that reason that it is famously referred to as the fuel that runs the Ethereum.

The supply of Ether is limited. The whole ether amount, including the operations in the network was decided during the 2014 presale. Not more than 18 million worth of Ether get issued annually, which was around 25% for the first issue. It was set as the system in reducing inflation.

Issue Your Own Token on the Ethereum Network

Users can interact with the Ethereum blockchain and even create their own currency or token. Individuals or even entities can create a private or public tradeable crypto token that can be used as a currency, a representation of an asset, a virtual share, a proof of membership or anything at all. In essence, it is a token within the Ethereum token.

A company could institute sort of loyalty program or membership where only their customers could use that token. Another use could be people seeking crowdfunding similar to GoFundMe where creators could issue tokens in return for investment.  Written in the tokens code would be an contract stating that the holder of the token. This would work in the same as a dividend, expect all transactions could would be transparent and be executed with the use of smart contracts via the code.

Read More: What is an altcoin?

The Potential Uses of Such a System Are Truly Limitless

The creators of Ethereum and the Ethereum foundation have supplied a universal programmable blockchain and packaged it up into a client that anyone can use. The possibilities to use this blockchain technology are endless. It can be used for financial exchanges, sharing hard disk space and unused computational, online voting, peer-to-peer commerce, distributed governance, and human collaboration as a whole.

To learn more about Ethereum, visit the official website: http://www.ethereum.org

Next Article: Who Invented Ethereum?